General Principals Flashcards
What are the 4 Beta fish
AOC
LLC
COVERDELL
529
Fiscal Policy is set by who?
Congress
Fiscal Policy does what?
Tax and Spend
Monetary Policy is controlled by who?
The Fed
4 levers of Monetary Policy (The Fed)
“DORM”
D - Discount rate
O - Open market operations
R - Reserve require
M - Margin requirements
Registration requirements for RIA’s
- Under $100M AUM: register w/state
- Over $110M AUM: register w/SEC
Exceptions to register as an RIA
“TABLE”
Teacher
Accountant
Banker
Lawyer
Engineer
Which states get a full step in when 1 dies?
Community property (“communist property”)
- California
PITI - max %
28% of GROSS income
- principal
- interest
- taxes (only for home)
- insurance (only for home)
Total monthly debt max
36% of GROSS
What is all included in current ratio
Formula:
“Current Assets / Current Liabilities”
Assets:
- Cash
- marketable securities
- ARs
- Inventory
Liabilities:
- Cash owed
- Credit card
- AP’s
- Taxes payable
What are the 7 steps for financial planning?
(Write out with acronym)
“Uber Is A Drunk Persons Immediate Mode (of transportation)”
- Understanding financial position
- Identifying goals
- Assess current course of action and other alternatives
- Develop a plan
- Present the plan
- Implement the plan
- Monitor the plan
How to Calc remaining principal payment after # of years
1) TVM
2) 1, INPUT, AMORT
3) =, =, =
What % do colleges expect parents to use of their assets?
5.64%
(Small business assets are excluded if parent owns over 50%)
When is a series 7 vs a series 6 needed?
Series 6:
- Can sell mutual funds, UITs (primary offerings only), and variable life/annuities
- Cannot sell individual stocks or ETFs
Series 7:
- Can sell all securities except comodities and certain options
Punitive Damages
Wrongful death = tax free
Otherwise = taxable (confirm???)
Compensatory damages
Principal = tax free
Any growth = taxable
(Example: age discrimination)
Bankruptcy (means test)
- If avg net income > $10k/mo for past 60 months: ch 7 is not an option
- If avg net income < $6k/mo for past 60 months: Ch 7 is allowed
In between: can file ch 7 IF total debt <25% of unsecured debt
3 forms of bankruptcy
1) Ch 11: exceed debt limits or do not have regular income so do not qualify under ch 13
2) Ch 13: reorganization. Payments reduced to be manageable. Creditors cannot harass.
3) Ch 7: Wipes out debt but can claim state or Fed exemptions to keep certain assets (like house)
Express authority
Written
Implied authority
The public believes you have authority due to signage / rate books / etc
Apparent authority
Happens due to negligence of the principal in allowing a terminated agent to have authority due to PAST authority
(Applications were not confiscated for example)
FINRA registration process (4 steps)
1) associates with BD firm
2) registers with finra through the BD via U4 form
3) pass exam
4) CRD system makes registration uniform among states
(Disciplinary action is maintained on CRD system. Info reported through the U4 form)
Investment advisors SEC registration process (3 things)
1) Files ADV form
2) Filing fee of $150
3) Submit ADV part 1 and Sch I updated annually
(To cease operations: ADV-W)
Who is an investment advisor?
(ABC TEST)
A - advice
B - in the business of providing such services
C - compensated for it
What regulates investment advisors and their activities?
SEC via IAA of 1940
(Investment Advisors Act)
What regulates investment companies and their activities?
SEC via ICA of 1940
(Investment Companies Act)
Reverse mortgage
Age 62+
Proceeds are tax free
Deflation vs Stagflation
Deflation: decline in prices
Stagflation: slow economic growth and high unemployment with rising prices
Durable vs non durable
Durable: hard goods that do not wear out quickly (cars, appliances, toys)
Non-durable: consumables. Used up immediately, has a short life span (food, fuel, shoes)
GDP
Measures newly produced within the country’s boundaries
4 ways to pay for graduate school
1) unsubsidized stafford loans
2) Fulbright scholarship
3) 529 w/d
4) coverdell ESA
Lifetime learning credit (LLC)
- $2,000 annual max CREDIT
- any higher learning institution (graduate???)
- MAGI phaseout
American Opportunity Credit
- 100% of first $2,000
- 25% of next $2,000
For a max of $2,500 CREDIT
First 4 years of college only (cannot be used for room and board)
MAGI phaseout
UTMA/UGMA
- gift of PV
- subject to kiddie tax
Coverdell ESA
Contributions may not be made after age 18
Must be used before age 30 (remainder cannot be reclaimed)
MAGI phaseout
Can be used for k-12 expenses
Cannot be used for student loans
529
Can use $10k/ yr for k-12 tuition
Can use $10 TOTAL for student loans
The Court System does what?
Renders a decision the meaning of policy terms.
What does the judicial system do?
Interprets contract law
What does the legislative branch do?
Enacts laws
What does the state commissioner do?
Enforces day to day application of the laws
What act created the SEC?
Securities Act of 1934
(Regulates the secondary market and created the SEC)
Credit Unions
- Non-profit financial organizations
- No FDIC insurance but has “‘credit union share insurance”
- Purpose: Save & borrow at “reasonable rates”
- Does NOT typically offer commercial loans
FDIC Insurance ownership categories (4)
1) Ind
2) Joint
3) Trust
4) IRA/Keogh
Unequal cash flow calcuation
0, CFj
#, CFj
#, CFj
…
Then: GOLD, NVP
Statement of financial position
Balance Sheet
3 Business Financial Statements
1) Book value (aka Business net worth/corporation balance sheet)
2) Capitalized value = annual income / cap rate
3) Pro-forma statement: Projects expected profitability or return for next year or longer
